Navigating the world of estate, in Japan can be quite a journey especially if you’re new to it. One term that often comes up is “lease renewal” or “更新” in Japanese, which might be unfamiliar to many of you. The purpose of this article is to shed light on the intricacies of lease contracts and make them easier to understand. We’ll cover everything from types of leases to the costs involved and the procedures you need to follow. Whether you’re experiencing the process of renewing your apartment lease for the time or just looking for a guide, to leasing in Japan we’ve got you covered. Lets dive into the essentials of this leasing landscape and equip you with all the knowledge you need to make informed decisions.
If you are not sure about initial cost or Monthly cost to rent an apartment in Japan, please refer to the articles below.
Table of Contents
Quick Video Guide
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Basic lease type in Japan
In japan, there are 2 basic lease types.
普通借家契約/Regular Lease Agreement
The Futsu Shaku Keiyaku stipulates a certain period for property rental. The majority of properties fall under this contract type. With this agreement, you can continue living if you renew the contract after its term ends.
If the tenant wishes to renew, the landlord cannot refuse unless there are special reasons.
In a regular lease agreement, it’s common to set the initial contract period for two years, with renewals every two years thereafter.
定期借家契約/Fixed-term Lease Agreement
The Teiki Shakka Keiyaku is different. The contract ends once the agreed-upon term ends. Unlike the regular Lease Agreement, this type does not include the concept of renewal.
You can extend the contract, but instead of renewing, you will be creating a new contract with the landlord, making it distinct from a renewal.
This provides an advantage to the landlord. With the Regular Lease Agreement, if a landlord wishes to temporarily lease out a property due to an overseas transfer for exaple, it might not guarantee the property will be vacant upon their return. However, with the Fixed-term Lease Agreement, the landlord can lease out until they return.
How Much is it for renewing apartment lease.
The cost depends on your contract. There are four types of fees you might need to pay when renewing the contract:
Renewal Fee: This is the cost paid to the landlord upon contract renewal. When a renewal fee is required, it typically ranges from half a month to one month’s rent. It’s important to note that not all areas in Japan have this system, and it is heavily influenced by regional customs.
Renewal Administrative Fee: This fee is paid to the management company of the apartment. It is a fee for creating the contract when renewing, and is usually paid to the real estate management company. The renewal administrative fee varies depending on the area and may not be required. The usual range for the renewal administrative fee is around 0.2 to 0.4 months’ rent.
Fire Insurance: As introduced in this article, when moving into a rental apartment, it is essential to pay for fire insurance. It is common to align the rental contract period with the duration of the fire insurance contract. Since rental agreements for housing typically involve renewals every two years, it is also customary for fire insurance to have a standard contract duration of two years. Generally, when renewing, you will pay an amount equivalent to the insurance premium paid at the time of the initial contract.
Renewal Costs for the Guarantor Company: If you are required to contract with a rental guarantee company, there may be costs associated with renewing the contract with the guarantee company or paying the renewal guarantee fee. The amount varies depending on the guarantor company, but it seems that it is often 10% to 30% of the rent per year.
What is the process renewing apartment lease?
When you want to renew
Typically, as the expiration date of the contract approaches, you will receive a notice of renewal from the landlord or management company through written communication. It’s common to receive the notice about 1 to 3 months before the renewal date. If you don’t receive it, it’s advisable to check promptly. Afterwards, you simply need to sign and stamp the enclosed renewal contract and necessary documents, then return them. Once you make the renewal fee payment, the process is complete.
When you want to vacate
Depending on the terms of the contract, it’s usually customary to notify the landlord or management company of your intent to vacate at least one month before leaving. Note that if your notice is delayed even slightly, it might result in a renewal fee. Therefore, if you wish to vacate, it’s recommended to contact them promptly, without waiting for a full month.
Key Take Away
Lease Types in Japan:
- Japan has two basic lease types: 普通借家契約 (Regular Lease Agreement) and 定期借家契約 (Fixed-term Lease Agreement).
- The Regular Lease Agreement sets a specific rental period, and most properties fall under this category. Before the contract ends, you can renew it by paying renewing fee.
- The Fixed-term Lease Agreement ends once the agreed-upon term concludes. Unlike regular leases, this type doesn’t allow for renewal, but an extension can be negotiated.
Costs for Renewing an Apartment Lease:
- Renewal Fee: Paid to the landlord upon contract renewal, typically ranging from half a month to one month’s rent.
- Renewal Administrative Fee: Paid to the apartment’s management company, usually ranging from 10,000 to 30,000 yen.
- Fire Insurance: Its duration often aligns with the rental contract, usually two years. Upon renewal, an amount similar to the initial premium is paid.
- Renewal Costs for the Guarantor Company: If a rental guarantee company is involved, there may be associated costs.
The Renewal Process:
- Renewal Notice: As the contract’s expiration approaches, expect a renewal notice from the landlord or management company about 1 to 3 months beforehand.
- Renewal Procedure: Sign and submit the provided renewal contract and necessary documents. Complete the process by paying the renewal fee.
- Moving Out: Notify the landlord or management company of your intent to vacate at least one month in advance, following the contract terms. Delayed notice may incur a renewal fee, so prompt communication is recommended.
